Services

England lags behind over rail cash

A huge disparity between the level of Government funding for train journeys in England and those in Scotland and Wales has been revealed in a report from rail regulators.

The report , from the Office of Rail Regulation (ORR), also details the subsidy each train company receives from the public purse and just how much they pay back in premiums to the Treasury.

The details have been seized on by those unhappy with the present rail franchise system and who would like to see the East Coast company - the only one run in the public sector - staying out of private hands.

The report showed that Government funding in 2012/13 varied from £2.19 per passenger journey in England to £7.60 in Scotland and £9.33 in Wales.

Total government funding for 2012/13 for the railways amounted to £4 billion which represented 30.9% of the industry's total income and included £700,000 from Transport Scotland and £100,000 from the Welsh Government.

Government funding in 2012/13 decreased by 4.2% from 2011/12 and by 9.1% from 2010/11.

In line with ministerial policy, passengers are covering an increased proportion of the rail industry's income relative to taxpayers. Through fares paid, passengers accounted for 59.2% of rail industry costs in 2012/13, compared with 57.4% in 2011/12 and 55.6% in 2010/11.

Covering the period April 2012 to March 2013, the ORR's report also showed:

:: Total income from passenger fares was £7.7 billion - 3.6 % higher than in 2011/12 and 7.2% higher than 2010/11. This was largely due to more passenger journeys on the network;

:: The industry earned nearly £3 billion from discounted tickets (such as advance, off-peak, super-off peak and special offers) - amounting to more than 40% of the total passenger income;

:: The cost of running Britain's railways was £12.3 billion in 2012-13. This overall cost has remained consistent over the past three years;

:: Rolling stock charges paid by Virgin Trains, for example, were £302 million but those paid by East Coast were £53 million;

:: The average age of Virgin's trains is nine years, with the fleet mostly made up of Class 390 Pendolinos, whereas the average age of East Coast's fleet is 27 years mostly comprising of InterCity 225s.

ORR chief executive Richard Price said: "Britain's rail industry receives substantial income from passengers and taxpayers. People have a right to know where the money goes and what it helps deliver.

"Passengers are increasingly the main funder of the railways, and must be central to developing its plans for the future. The ORR is working to put passengers at the heart of the railways."

Shadow transport secretary Mary Creagh said: "Today's report shows that the publicly owned East Coast company is highly efficient, returning more to taxpayers than it receives in funding.

"Yet David Cameron is obsessing about handing it back to the private sector. He should tackle his Government's cost-of-living crisis and cap fare rises for struggling commuters."

She went on: "Passengers and taxpayers are picking up the tab for this out-of-touch Government's franchising fiasco with higher fares and more public subsidy.

"The Government's £40 million net contribution to train operating companies will skyrocket next year, as more franchise extensions mean worse value and higher contributions from taxpayers to train companies."

Michael Roberts, director general of industry body the Rail Delivery Group, said: "The ORR's report shines a light on why Britain's railway is such a big success story.

"An industry focused on attracting more passengers and freight, combined with a commitment by successive governments to invest over the long term, is generating phenomenal growth. This winning formula is helping to reduce unit costs while improving and expanding a vital public service."

TUC general secretary and chairwoman of Action For Rail, Frances O'Grady, said: "Today's figures show just how dependent rail firms have become on the public purse.

"Taxpayers' money that should be spent on improving services is instead being siphoned off into shareholders' pockets. Rail franchising is failing both passengers and taxpayers. The Government's determination to re-privatise the East Coast main line - even though it is delivering the biggest cash surplus of all - shows it has learnt nothing from past mistakes."

Manuel Cortes, leader of the TSSA rail union, said: "The facts clearly support our argument that publicly owned franchises like East Coast offer a much better deal than privately run franchises like Virgin.

"The private railway has been a 20-year lesson in failure, paid for by both passengers and taxpayers."

A Department for Transport spokesman said: "We recognise the positive impact the railways have on communities across the country.

"This is why we have embarked on one of the biggest programmes of modernisation ever, with more than £38 billion being spent to maintain and improve our network over the next five years."

He went on: "Subsidy and premium differ across the UK, even at a regional level, because of variations in demand and costs, with some busier services requiring less Government support.

"Many services would not be commercially viable without taxpayer funding, and we subsidise them because they deliver wide social, environmental and economic benefits to their communities."

Mick Cash, acting general secretary of the RMT union, said: "The corporate welfare on Britain's railways continues unchecked with the scroungers from the private train companies fleecing the British people for mind-blowing sums of money.

"The case for bringing the whole rail network under public ownership, and ending the scandals of subsidy and revenue support, is absolutely overwhelming and it's about time that the politicians of all parties took note."

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